Building Resilience in Business

Building Resilience in Business

By Tina Zawila

Resilience is a bit of a buzz word at the moment. We talk about building resilience in our kids, and even as adults we must continually deal with the challenges life throws at us. It can be defined as “the capacity to recover quickly from difficulties, toughness and the ability to spring back into shape, elasticity”.

So what about our business?  How resilient is your business and how resilient are you as a business owner?  Can your business adapt quickly to disruptions while still maintaining continuous business operations? 

Most business owners deal with difficult situations, tough times and challenges on a daily basis!  Whether it’s a serious cashflow crisis, or simply a team member’s absence due to the flu, the business owner needs to problem solve and adapt immediately. As a business owner and leader, your decisions are often visible and subject to review and judgement by others – your partner, customers, team, bankers, the ATO and the list goes on.

So how do you build your own resilience to have confidence in your decisions and to bounce back when things don’t go as planned?

• Have strategies to cope with stress, maintain your self esteem and focus on your skills and abilities.  If something goes wrong ask “What did I learn from that?”
•  Know your purpose and have clear values and goals.  Be persistent and constantly develop your problem-solving skills.
•  Develop personal relationships with a support network of people that understand and can help and support you.
• Be adaptable and know what you have the power to change and control, and what you do not.
• Practice self-care by taking time to rest, exercise and eat well.

Business life can be challenging, however, if you are building a business that you are passionate about, you will always find a way to overcome any obstacles that may arise. And remember, you are not alone. Your business advisor is only a phone call away.

Call the professional team at Sothertons on 4972 1300 today. 

Are your tax deductions about to be cut?

By Steven Marsten

It’s important that people raise matters to consider where it improves Australia’s economic outcomes, however this week I couldn’t believe what I was hearing (and reading). A spokesperson for a large National Accounting firm was proposing that we limit Taxpayers work related expense (WRE) deductions to a flat $1,000 per annum! This was suggested as a result of spiralling claims in recent years and in some cases - false claims. No one doubts there are always going to be some bad eggs.

You don’t usually hear us say this but thank goodness the ATO replied with a “common sense” approach – suggesting that a cap on WRE would not be productive to the nation.

Everyone in Business has the ability to claim costs in earning assessable income. That should not be different to a salary and wage earner. The ATO spokesman acknowledged that the House of Representatives standing committee on economics handed down a report - “Report on the inquiry into tax deductibility” (House Report) that made a recommendation to the government “not to alter the current arrangements despite evidence of a substantial increase in WRE costs”.

“Ultimately the report said it didn't want to tinker with the system too much, it was going to go ask the tax office to raise compliance, raise education and it was going to ask Treasury to come back with more concrete numbers about the tax gap,” said Mr Ram Pandey of the ATO.

For heaven’s sake am I missing something here? Taxpayers pay Income Tax on their wages as well as a Medicare levy and GST on most things together with a bunch of hidden taxes at the local government and state government level that most people aren’t even aware of. Quite frankly, denying a taxpayer legitimate tax deductions incurred in the earning of one’s wages does not sound fair or equitable and should not be up for consideration.

There is enough tinkering of the tax system including everyone’s superannuation seemingly on an annual basis and I know many would like to see the Governments live within their means for a change instead of devising ways to tax the average worker more! If we all thought Governments were spending our taxes efficiently, perhaps we would give more positive consideration to the various changes.

How much is your business worth?

By Tina Zawila

Often the first time a business owner seriously asks this question is when they are ready to sell their business (and they usually want it sold ASAP!).   And unfortunately, the answer often isn’t anywhere near the figure they want or need.   In fact, most of them have no idea how to calculate the value of their business, or how a potential purchaser would calculate it, and instead are just going on their own “gut feel of what it’s worth”.

Why is it that most business owners don’t know, or monitor, the value of one of their largest assets?  Most will tell you that their business is their “superannuation” – and yet they don’t receive an annual statement to tell them what it’s worth, and maybe they don’t understand their financial reports enough to be able to calculate their annual return on investment.

At Sothertons, we believe you should be tracking the value and growth of your business throughout your business journey, not just when it’s time to sell.

I’m not suggesting that you need to have a full business valuation prepared, but you should at least be having a discussion as to the potential value of your business with your advisor at least annually.  You should have an understanding of how a business in your industry is valued and therefore how you can maximise the value of yours.   Business value is also a good measure of the success of your business strategies and operations.

If you plan to sell you business in the foreseeable future (in the next 3 to 5 years) then you definitely should be having this conversation with your business advisor NOW.  The sale of your business should be well-planned to maximise the return on your investment.

Ultimately, the value of a business is determined by a willing buyer and a willing seller, however, if you are the seller, you should be confident that your asking price is appropriate and well-supported. 

If you need advice on the value of your business contact our professional team today on 49721300.

Is The Taxman Coming For You?

By Joe Smith

At Sothertons we normally like to focus on the positives and things that can be done to improve your individual or business position in our articles.  However, we have recently seen changes in the approach of the Taxman that we believe every taxpayer needs to be aware of to minimise the risk of the Taxman coming after you, your business or both!

In the current economic climate there may be some businesses that are struggling to keep up with their tax obligations.  And it would appear that the Taxman is acting faster and penalising taxpayers to the full extent of their powers.

An example of this would be if a business got behind in paying GST and PAYG Withholding from wages.  The Taxman is entitled to issue Directors Penalty Notices (DPN’s) to the directors of a company with the penalty up to the amount of the PAYG Withholding and superannuation outstanding plus interest. 

Then if the amounts due are not paid within 21 days the penalties can be applied as being payable by each director of the company personally.  So if PAYG Withholding of $100,000 was outstanding and a company had 4 directors, a total of $100,000 plus $400,000 in penalties would be due to the ATO!  

We are seeing reports of this happening which is resulting in taxpayers being made bankrupt personally due to a company debt.

On a more positive note, there are ‘Safe Harbour Rules’ that may be legislated in the coming months where if the directors of a company put appropriate measures in place to turnaround their business as well as other measures including seeking professional advice, the exposure personally may be reduced significantly.

If you own a business and would like to know more or are interested in possible turnaround strategies for your business we can help with this in a number of ways.  Or if you need assistance with paying your tax obligations please contact Sothertons Gladstone on 4972 1300 and we can negotiate with the Taxman to possibly pay the amounts due over a period of up to 24 months.